A network group booking model for airline revenue management

Abstract

Purpose Airlines use various analytical techniques to optimally control seats in its various fare classes. Most literature on inventory control does not discuss policies for group arrivals. This study aims to address the literature gap in determining an optimal booking policy which considers the dynamics of group behaviour with respect to cancellations and refunds. Design/methodology/approach An analytical model by which bid price control mechanism can be applied to group bookings is developed through this study. Findings Numerical experiments are performed to demonstrate the analytical model under various scenarios. A comparison of the model with the traditional model indicates an increase in the total revenue generated. Originality/value The novelty of this work is in modelling the dynamics of group behaviour in a network of flights, and it contributes to the literature on revenue management.

Revenue Management Strategies in Airline Industry: A Literature Review

“…The determination of optimal capacity allocation can take into account the dynamics of group behavior concerning cancellations and refunds. The research findings indicate an increase in the total generated revenue as a result [18]. Determining capacity allocation for cargo planes is also essential to boost revenue.…”

EMSRtrc: relaxation of booking limits by total revenue control for expected marginal seat revenue

“…There are other optimization models for ARM in the literature. Venkataraman et al ( 2021 ) sought to determine an optimal reservation policy that considers the dynamics of group behavior regarding cancelations and refunds. They compared their model with the traditional model under various scenarios and demonstrated that they achieved better total revenue.…”